Southern Water handed £1.2bn liquidity boost by 'vampire kangaroo'
The so-called 'vampire kangaroo' will initially inject £655million into the group followed by a minimum £245million by December, which could grow to £545million.
Southern Water, which serves 4.7 million people across southern England, said on Tuesday the added equity will help fund planned infrastructure upgrades over the coming five years.
Over the 2025 to 2030 regulatory period, the business intends to spend £8.5billion on improving services, including £3.3billion towards environmental projects.
Like the rest of the UK water industry, Southern Water has come under considerable criticism for its environmental record.
It was fined a record £90million four years ago for deliberately dumping raw sewage into the sea across sites in Kent, Hampshire, and West Sussex between 2010 and 2015.
In October last year, water regulator Ofwat ordered the group to refund £31.9million to customers for missing targets on leaks and sewage spills.
By 2030, Southern Water aims to reduce its leakage rate from 17 per cent to 13 per cent, halve the overall number of pollution incidents, and cut the amount of water it takes from the environment by 50 million litres per day.
Lawrence Gosden, its chief executive, said: 'Every penny of this equity raise will go directly towards delivering the largest growth investment programme in the sector relative to its size.
'Taken together with the reduction in debt, and no forecast dividends for the 2025-30 regulatory period, the new investment will directly support Southern Water's financial resilience and improving performance.'
Macquarie - nicknamed the 'Vampire Kangaroo' by critics - has faced significant condemnation for its previous part-ownership of Thames Water.
Thames Water's debts more than tripled from £3.4billion in 2006, when Macquarie first acquired the company, to £10.8billion in 2017, when it sold its final stake in the firm.
Macquarie has claimed that during the 11-year period, it invested over £11billion in Thames Water's network, the most of any English or Welsh water company on a per-customer basis.
As part of the Southern Water deal, Macquarie has agreed to slash debts in the Worthing-based group's holding companies from about £865million to £415million.
'With the help of our investors' capital, Southern Water will have the financial resources to maintain its positive momentum,' said Martin Bradley, senior managing director at Macquarie Asset Management.
'While it's been a difficult time to raise private sector capital for a UK water company, we are aligned with the Government's ambition to reform the sector and are encouraged by the desire to achieve the reset required to effect real long-term change.'
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